River Valley Poultry Farm Ltd. v. Attorney General of Canada et al.

[Indexed as: River Valley Poultry Farm Ltd. v. Canada (Attorney General)]

95 O.R. (3d) 1

Court of Appeal for Ontario,

Laskin, Borins and K.N. Feldman JJ.A.

April 22, 2009

Courts -- Jurisdiction -- Provincial superior courts -- Plaintiff not required to successfully challenge actions of federal agencies by judicial review in Federal Court before suing them for damages in Superior Court.

Negligence -- Duty of care -- Testing by Canadian Food Inspection Agency ("CFIA") and Health Canada eventually showing that some of plaintiff egg producer's chickens were infected by potentially dangerous strain of salmonella -- Plaintiff destroying entire flock before final test results were received -- Plaintiff claiming that testing took too long and suing CFIA and Health Canada for negligent investigation -- CFIA and Health Canada not owing private law duty of care to plaintiff -- Plaintiff failing to establish existence of proximity.

The Canadian Food Inspection Agency ("CFIA") is a federal agency responsible for the administration and enforcement of, among other statutes, the Health of Animals Act, S.C. 1990, c. 21. When a potentially dangerous strain of salmonella was found in fluff test samples sent to CFIA by a supplier of the plaintiff egg producer, CFIA ordered Health Canada to do a risk assessment. Testing by CFIA and Health Canada eventually showed that only part of the plaintiff's chicken flock was infected. The plaintiff contended that the testing took too long and that it was obliged to destroy its entire flock before it received the final test results. It sued CFIA and Health Canada for damages for negligent investigation. On a motion under rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for the determination of questions of law raised by the pleadings, the motion judge found that CFIA and Health Canada owed a duty of care to the plaintiff which arose when the plaintiff was "targeted" for investigation. The defendants appealed.

Held, the appeal should be allowed.

The Superior Court has jurisdiction to adjudicate a claim for damages for negligence against a federal agency. The plaintiff was not required to successfully challenge the actions of CFIA and Health Canada by judicial review in the Federal Court before suing for damages in the Superior Court.

The plaintiff did not allege in its statement of claim that Health Canada owed it a duty of care. On that ground alone, the motion judge should not have found [page2 [on a rule 21.01(1) (a) motion that Health Canada owed the plaintiff a duty of care. Apart from the pleading, the evidence adduced on the motion showed that there was no close and direct relationship between the two that would make it fair and just to impose a duty of care on Health Canada. Health Canada took on the role of testing and assessing the risk of contamination not because of any concern for the plaintiff's economic interests but because of its overriding public health mandate to prevent the spread of potentially contaminated food.

The motion judge was justified in concluding that the plaintiff had established that it was reasonably foreseeable that it would be harmed as a result of a negligently delayed investigation. However, he erred in concluding that the plaintiff had established the existence of a close and direct relationship between it and CFIA that it would make it fair and just to impose a duty of care on CFIA. Mere targeting for investigation by a government agency which is responsible for preventing and controlling the spread of disease in the interest of animal and public health is not enough to establish proximity. The Health of Animals Act discloses a legislative intention to exclude a private law duty. Nothing in the Act suggests that one of its purposes is to protect the economic interests of individual farmers. In exercising the broad powers of inspection conferred on them by the Act, CFIA inspectors are not obliged to be mindful of the economic interests of individual farmers; their overriding concern is the protection and promotion of human and animal health. The statutory compensation scheme in s. 51 of the Act also points to the absence of proximity. Section 51(1)(a) authorizes the Minister of Agriculture to order compensation to an owner of an animal that an inspector has ordered to be destroyed. Once compensation has been paid under s. 51, then s. 9 of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50 applies. That provision bars an action against the Crown in respect of any claim for which statutory compensation has been paid. It would be illogical to assume that when CFIA takes the drastic action of ordering the destruction of an animal it owes no private duty of care, yet when it takes less drastic action, as it did in this case, it then owes a private duty to an individual farmer. Finally, s. 50 of the Act, which shields CFIA inspectors from lawsuits for actions taken in carrying out their statutory duties, at the very least strongly points to a legislative intent to preclude a private law duty. CFIA did not owe a prima facie duty of care to the plaintiff. While it was unnecessary to decide that issue, there was at least one overriding policy consideration that also negated a private duty: the potential for conflict if CFIA must be mindful not only of the health of animals and the public, but also of the economic interests of individual farmers.

APPEAL by the defendants from the order of Pedlar J. of the Superior Court of Justice dated February 1, 2008 on a motion for the determination of questions of law.

Cases referred to Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492, [1977] 2 W.L.R. 1024, 75 L.G.R. 555, 141 J.P. 527, 5 Build. L.R. 1, 4 I.L.R. 21, 243 E.G. 523, [1977] E.G.D. 604 (H.L.); Telezone Inc. v. Canada (Attorney General); C-Civil Inc. v. Canada; Fielding Chemical Technologies Inc. v. Canada (Attorney General); McArthur v. Canada (Attorney General) (2008), 94 O.R. (3d) 19, [2008] O.J. No. 5291, 2008 ONCA 892, 40 C.E.L.R. (3d) 183, 245 O.A.C. 91, apld Grenier v. Canada (Attorney General), [2005] F.C.J. No. 1778, 2005 FCA 348, [2006] 2 F.C.R. 287, 262 D.L.R. (4th) 337, 344 N.R. 102, 145 A.C.W.S. (3d) 618, not folld Adams v. Borrel, [2008] N.B.J. No. 327, 2008 NBCA 62, 297 D.L.R. (4th) 400, 60 C.C.L.T. (3d) 161, 336 N.B.R. (2d) 223, 169 A.C.W.S. (3d) 916; Correia v. Canac Kitchens, a division of Kohler Ltd. (2008), 91 O.R. (3d) 353, [2008] O.J. No. 2497, 2008 ONCA 506, 294 D.L.R. (4th) 525, 58 C.C.L.T. (3d) 29, 167 A.C.W.S. (3d) 422, 67 C.C.E.L. (3d) 1, 240 O.A.C. 153, [2009] CLLC Â210-001; [page3 ][cf2]Eliopoulos (Litigation Trustee of) v. Ontario (Minister of Health and Long-Term Care) (2006), 2006 CanLII 37121 (ON CA), 82 O.R. (3d) 321, [2006] O.J. No. 4400, 276 D.L.R. (4th) 411, 217 O.A.C. 69, 43 C.C.L.T. (3d) 163, 35 C.P.C. (6th) 7, 152 A.C.W.S. (3d) 622 (C.A.); Hill v. Hamilton-Wentworth Regional Police Services Board, [2007] S.C.J. No. 41, 2007 SCC 41, 285 D.L.R. (4th) 620, 368 N.R. 1, J.E. 2007-1867, 230 O.A.C. 253, 64 Admin. L.R. (4th) 163, 50 C.C.L.T. (3d) 1, 50 C.R. (6th) 279, 40 M.P.L.R. (4th) 1, 160 A.C.W.S. (3d) 573, EYB 2007-124525, distd

Other cases referred to Attis v. Canada (Minister of Health) (2008), 93 O.R. (3d) 35, [2008] O.J. No. 3766, 2008 ONCA 660, 300 D.L.R. (4th) 415, 169 A.C.W.S. (3d) 684; Cooper v. Hobart, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76, 2001 SCC 79, 206 D.L.R. (4th) 193, 277 N.R. 113, [2002] 1 W.W.R. 221, J.E. 2001-2153, 160 B.C.A.C. 268, 96 B.C.L.R. (3d) 36, 8 C.C.L.T. (3d) 26, 110 A.C.W.S. (3d) 943; Drady v. Canada (Minister of Health), [2008] O.J. No. 3772, 2008 ONCA 659, 300 D.L.R. (4th) 443, 169 A.C.W.S. (3d) 683; Edwards v. Law Society of Upper Canada, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77, 2001 SCC 80, 206 D.L.R. (4th) 211, 277 N.R. 145, J.E. 2001-2152, 153 O.A.C. 388, 34 Admin. L.R. (3d) 38, 8 C.C.L.T. (3d) 153, 13 C.P.C. (5th) 35, 110 A.C.W.S. (3d) 944; Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74, 2003 SCC 69, 233 D.L.R. (4th) 193, 312 N.R. 305, J.E. 2004-47, 180 O.A.C. 201, 11 Admin. L.R. (4th) 45, 19 C.C.L.T. (3d) 163, 127 A.C.W.S. (3d) 178; Vona v. Canada (Minister of Agriculture) (1996), 1996 CanLII 800 (ON CA), 30 O.R. (3d) 687, [1996] O.J. No. 3621, 94 O.A.C. 390, 4 C.P.C. (4th) 23, 66 A.C.W.S. (3d) 261 (C.A.)

Statutes referred to Canada Agricultural Products Act, R.S.C. 1985, c. 20 (4th Supp.), ss. 23, 27 [as am.] Canadian Charter of Rights and Freedoms Canadian Food Inspection Agency Act, S.C. 1997, c. 6, ss. 3, 11 [as am.] Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, s. 9 Food and Drugs Act, R.S.C. 1985, c. F-27, s. 23, (1), (a), (d) Health of Animals Act, S.C. 1990, c. 21, ss. 32 [as am.], 38, (1)(d), (e), 39, 45 [as am.], 50, 51 [as am.], (1)(a) [as am.], (2), 52 Health Protection and Promotion Act, R.S.O. 1990, c. H.7 Plant Protection Act, S.C. 1990, c. 22, ss. 2, 38, 39 [as am.]

Rules and regulations referred to Health of Animals Regulations, C.R.C., c. 296, s. 91.1 Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 21.01(1) (a)

Miriam Flynn and Melanie Toolsie, for appellant. Norman Peel and Susan N. Peel, for respondent

The judgment of the court was delivered by

LASKIN J.A.: --

A. Introduction

[1] The main question on this appeal is whether two government authorities -- the Canadian Food Inspection Agency page4 and Health Canada -- owed a private duty of care to an egg producer allegedly economically harmed by their actions.

[2] River Valley Poultry Farm Ltd. has sued CFIA and Health Canada (represented by the Attorney General of Canada) for damages for negligently investigating whether its flock was infected by a potentially dangerous strain of salmonella. Testing by CFIA and Health Canada eventually showed that only part of River Valley's flock was infected. However, River Valley contends that the testing took too long and that it was obliged to destroy its entire flock before it received the test results. It claims that CFIA and Health Canada owed it a duty to investigate promptly and competently and that because they breached that duty, they are liable in negligence for River Valley's resulting economic losses.

[3] Both CFIA and Health Canada deny that they were negligent. But they also contend that although they owed a public duty to the people of Canada to safeguard their food supply and the health of their animals, they did not owe a private duty of care to an individual producer.

[4] As Canadian courts had not recognized that either CFIA or Health Canada had a private duty of care in this factual setting, the parties brought a pre-trial motion to determine four questions of law: -- Did CFIA owe a duty of care to River Valley? -- Did Health Canada owe a duty of care to River Valley? -- If so, when did the duty arise? -- If so, what was the standard of care?

[5] Pedlar J. answered "yes" to the first two questions. He concluded that the duty arose when River Valley was "targeted" for investigation (October 18, 2001). He also concluded that the standard of care was how a reasonable investigator with like skills and expertise would have acted in like circumstances. The motion judge's conclusions on these last two questions are not in issue on this appeal.

[6] The Attorney General of Canada seeks to set aside the decision of the motion judge on three grounds: (1) River Valley must successfully challenge the actions of CFIA and Health Canada by judicial review in the Federal Court before maintaining an action for damages in the Ontario Superior Court. [page5 ] (2) Neither Health Canada nor CFIA owed a duty of care to River Valley. This ground of appeal rests mainly on the submission that the relationship between River Valley and the government authorities lacked sufficient "proximity" or was not sufficiently close and direct to make it fair and just to impose a private duty of care. (3) The statutory immunity clause in s. 50 of the Health of Animals Act, S.C. 1990, c. 21 bars any action against CFIA.

[7] I would allow the appeal on the second ground advanced by the Attorney General. In my view, neither CFIA nor Health Canada owed a duty of care to River Valley to conduct a timely and competent investigation.

B. Factual Background

[8] The parties' motion was brought under rule 21.01(1)(a) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] -- a motion for the determination of questions of law raised by the pleadings. The parties agreed that in determining these questions, the motion judge could consider the pleadings, the documents that had been produced and the examinations of representatives of the parties. Implicitly, the motion judge concluded that he had a sufficient factual record to resolve the four questions put to him. I agree that he did, and will rest my own analysis largely on his factual summary and his findings of fact.

[9] What follows is a brief chronology, including the roles CFIA and Health Canada undertook, the time each took in investigating whether River Valley's flock was infected by salmonella and, as well, the industry compensation River Valley has received.

(a) The parties

[10] CFIA is established under s. 3 of the Canadian Food Inspection Agency Act, S.C. 1997, c. 6. Under s. 11, CFIA is responsible for the administration and enforcement of a number of federal statutes. The pertinent statute for this appeal is the Health of Animals Act. Section 32 of that statute gives the president of CFIA authority to appoint analysts, inspectors and veterinarians. Under s. 38, these appointees have broad powers to inspect hatcheries and egg producers.

[11] Health Canada is a federal department under the authority of the Ministry of Health. It is responsible for administering and enforcing the Food and Drugs Act, R.S.C. 1985, c. F-27, which, among other things, prohibits the sale of food containing substances harmful to or unfit for human consumption. Health [page6 ]Canada also has a public health mandate to prevent the spread of disease. Importantly for this appeal, Health Canada maintains scientific laboratories for testing, and provides technical assistance and expertise to provincial and federal regulatory authorities.

[12] River Valley is an egg producer in Newburgh, Ontario. Its purchase of egg producing chicks from McKinley Hatchery (St. Mary's) Limited in July 2001 led to this litigation.

(b) Late July 2001: McKinley delivers the chicks to River Valley

[13] Between July 20 and 24, 2001, McKinley shipped to River Valley over 84,000 one-day-old chicks. River Valley segregated the chicks into two pullet barns -- some were placed in its barn no. 2; the majority, over 54,000 chicks, were placed in barn no. 4. River Valley planned to keep the chicks in these two pullet barns for 19 weeks and then transfer them to production barns where they would lay their eggs. From River Valley's perspective, the segregation into two barns became important because test results for salmonella in barn 4 proved to be negative.

(c) Late July to mid-August 2001: CFIA and Health Canada detect salmonella typhimurium DT104 in McKinley's chicks

[14] On July 20, 2001, the day it began delivering chicks to River Valley, McKinley sent "fluff test" samples to a CFIA approved laboratory. It did so under an industry-run surveillance program, which monitors hatcheries and breeder flocks for significant poultry disease.

[15] On August 3, the laboratory reported that it had found salmonella in the McKinley samples. It sent the samples to a Health Canada lab for further testing. By mid-August, the Health Canada lab concluded its testing and reported finding salmonella typhimurium DT104 in the McKinley samples.

[16] DT104 was not a reportable disease under the Health of Animals Act, and CFIA had no policy on it. Indeed, it appears that this was the first time DT104 had been isolated in a layer hatchery. Still, CFIA was aware that this strain of salmonella was potentially dangerous because it was resistant to most commonly used antibiotics. And it was concerned that DT104 could pose a significant human health risk if the hatchery chicks were infected by it when they began laying eggs. If that were the case, the salmonella could be transmitted from the infected chicks to the inner contents of their eggs. Because of this concern, CFIA asked Health Canada to do a risk assessment. [page7 ]

(d) Early October 2001: Health Canada delivers its risk assessment to CFIA

[17] Health Canada noted that little was known about the potential for infected chicks to lay contaminated eggs. However, Health Canada thought it very likely that some chicks with DT104 would develop an ovarian infection. The eggs from these birds would carry a higher risk of being contaminated.

[18] Health Canada, therefore, made two recommendations. First, it recommended that over a two-week period environmental samples from River Valley's two barns be taken and tested to confirm the presence of DT104. Second, if the tests were positive for DT104, Health Canada recommended that the eggs not be sold to the table market, for consumption in homes and restaurants, but instead that they be diverted to the industrial product market and sold as pasteurized eggs.

(e) Mid to late October 2001: CFIA gives notice of DT104 contamination to McKinley and River Valley

[19] On October 18, 2001, acting under s. 91.1 of the Health of Animals Act Regulations, C.R.C., c. 296, CFIA required McKinley to notify all producers to whom it had sold chicks and the industry-run Ontario Egg Producers Marketing Board that these chicks may be infected.

[20] The motion judge held that CFIA's and Health Canada's duty of care arose on this date because from this date on River Valley was "targeted" for investigation. Four days later, on October 22, 2001, CFIA warned River Valley directly of the DT104 risk. In turn, River Valley told CFIA that its chicks had to be moved into production barns by the end of November because by then they would be laying eggs.

(f) November to early December 2001: Further testing and further notification

[21] In early November, CFIA collected samples from River Valley's barns to carry out the testing recommended in Health Canada's risk assessment. CFIA's initial testing detected the presence of DT104. It so advised River Valley and forwarded the samples to a Health Canada lab for further testing.

[22] Health Canada was of the view that one time sampling, even if negative, did not give a realistic assessment of the risk. It thought that the best time to take samples was when the birds started laying eggs. River Valley, however, was anxious to receive the final test results. It planned to move its chicks into production barns by November 24. Because testing was not [page8 ]completed, CFIA asked River Valley to delay moving the chicks and instead to keep them caged in the two pullet barns. River Valley agreed to do so. The delay meant that the chicks started laying eggs in these two barns under stressful conditions.

[23] On November 30, 2001, CFIA sent a letter to River Valley recommending, in the light of the initial positive test for DT104, that the eggs not be sold to the table market, but instead diverted to pasteurization. It did not, however, recommend or order that the eggs be destroyed.

[24] On December 4, 2001, Health Canada delivered a lab report showing that it had found DT104 in some samples from barn 2 but none from barn 4. However, Health Canada also said that it had not finalized its testing of all the samples from barn 4.

(g) December 2001 to late January 2002: The destruction of River Valley's flock and the final test results

[25] Although both CFIA and Health Canada had recommended that River Valley's eggs be sold as pasteurized eggs, both the Ontario Egg Producers Marketing Board and River Valley itself thought that this was an impractical recommendation. On December 6, 2001, the Ontario Marketing Board ordered River Valley not to market any eggs from the birds in "the two contaminated buildings". Burnbrae Farm, the main purchaser of River Valley's eggs, supported this order. On December 10, it said that it could not take the risk of buying these eggs. It agreed that the eggs be destroyed. On December 19 and 20, River Valley destroyed the entire flock that it had purchased from McKinley.

[26] On January 22, 2002, Health Canada delivered its final report to CFIA. The report showed that in barn 2, four of the 25 samples tested positive for DT104; in barn 4, however, all 27 samples tested negative.

(h) March 2002: Industry compensation

[27] The Canadian Egg Marketing Agency ("CEMA") is a national agency that regulates the production and marketing of eggs. It is controlled by provincial egg marketing boards and other egg industry interests. In March 2002, CEMA paid River Valley $119,334 under an agency policy for compensating producers whose eggs were infected by another strain of salmonella (salmonella enteriditis). Later, CEMA gave River Valley a further $300,000 in exchange for a release and River Valley's agreement to bring this litigation against the Crown. [page9 ]

(i) River Valley's lawsuit

[28] River Valley brought this action against three different interests: its own insurers, McKinley and the Attorney General of Canada (representing CFIA and Health Canada). It has settled with its own insurers. Its claim against McKinley for breach of warranty remains outstanding. In its claim against the Attorney General, River Valley has made many allegations but has pursued only one: its allegation of a negligent investigation.

C. Analysis

First issue: Must River Valley successfully challenge the actions of CFIA and Health Canada by judicial review in the Federal Court before suing for damages in the Superior Court?

[29] The Attorney General of Canada submits that River Valley cannot maintain its action for damages for negligence in the Superior Court because it has not challenged CFIA's and Health Canada's actions by a judicial review application in the Federal Court. In making this submission, the Attorney General relies on the decision of the Federal Court of Appeal in Grenier v. Canada (Attorney General), 2005 FCA 348, [2005] F.C.J. No. 1778, 262 D.L.R. (4th) 337 (C.A.). In that case, Letourneau J.A. wrote that an action for damages against a federal agency in a provincial superior court cannot proceed until the agency's decision has been successfully judicially reviewed in the Federal Court.

[30] This submission, however, is foreclosed by the recent quartet of cases decided in this court: see TeleZone Inc. v. Canada (Attorney General); G-Civil Inc. v. Canada; Fielding Chemical Technologies Inc. v. Canada (Attorney General); McArthur v. Canada (Attorney General) (2008), 94 O.R. (3d) 19, [2008] O.J. No. 5291, 2008 ONCA 892. In those cases, Borins J.A., writing for the panel, disagreed with the reasoning in Grenier. He concluded that the Superior Court has jurisdiction to adjudicate a claim for damages for negligence against a federal agency. A successful judicial review application in the Federal Court is not a condition precedent to the exercise of this jurisdiction. Accordingly, this ground of appeal fails.

Second issue: Did Health Canada and CFIA owe a duty of care to River Valley?

(a) The Anns test

[31] Whether either Health Canada or CFIA owed a duty of care to River Valley to investigate the possibility of DT104 contamination competently and promptly, or in a timely way, must [page10 ]be determined by applying the Anns test. This test is derived from the House of Lords decision in Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492 (H.L.), and in Canada has been modified by more recent Supreme Court of Canada decisions: see, for example, Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76; Edwards v. Law Society of Upper Canada, 2001 SCC 80, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77; and Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74.

[32] In its present Canadian form, the Anns test has three requirements. -- Reasonable foreseeability: Was it reasonably foreseeable that the actions of either Health Canada or CFIA would harm the economic interests of River Valley? -- Proximity: Was the relationship between either Health Canada or CFIA and River Valley sufficiently close and direct that it would be fair and just to impose a duty of care?

Put differently, in conducting their investigations, were Health Canada and CFIA obliged to be mindful of River Valley's legitimate economic interests? -- Absence of overriding policy considerations negating a duty of care: Although imposing a duty may be just, are there nonetheless broad policy considerations transcending the relationship between the parties that would make the imposition of a duty unwise?

[33] The reasonable foreseeability and proximity requirements fall under Stage I of the Anns test. The party seeking to establish a duty -- here River Valley -- has the onus of showing that both requirements have been met. If River Valley establishes reasonable foreseeability and proximity, then it has established a prima facie duty of care.

[34] The requirement to show the absence of overriding policy considerations negating a prima facie duty falls under Stage II of the Anns test. The party resisting the establishment of a duty -- here Health Canada or CFIA -- has the onus of meeting this requirement.

[35] In this case, River Valley seeks to establish a duty of care not presently recognized. In most cases where a party seeks to establish a previously unrecognized duty of care, the critical requirement is proximity. That is so in this case. Few cases need to be resolved under the second stage of the Anns test. That is also so in this case. [page11 ]

(b) Did Health Canada owe a duty of care to River Valley?

[36] In determining that both Health Canada and CFIA owed a duty of care, the motion judge did not distinguish between the two entities. He considered them together. In this court, both sides did as well. Respectfully, I think that approach is wrong.

[37] Health Canada and CFIA each played a different role in the investigation, each acted under a different statutory regime and, perhaps most important, the allegations against each in River Valley's statement of claim differed dramatically.

[38] I begin with the last point of difference, the allegations in the statement of claim. In its otherwise very detailed amended statement of claim, River Valley implicates Health Canada in only one paragraph; it alleges that the Crown is liable for the acts of negligence of Health Canada's employees. But the remainder of the pleading does not claim that the employees of Health Canada committed any acts of negligence. It does not even allege that Health Canada owed River Valley a duty of care. River Valley's pleading deals extensively with its claim against CFIA, McKinley and its own insurers. It makes no claim against Health Canada.

[39] A rule 21.01(1)(a) motion is a motion for a determination of a question of law raised by a pleading. River Valley's pleading raises no question of law concerning Health Canada. On this ground alone, the answer to the question did Health Canada owe a duty of care to River Valley? is no.

[40] Apart from the pleading, the evidence adduced on the motion shows that as between River Valley and Health Canada, the requirement of proximity is absent. There was no close and direct relationship between the two that would make it fair and just to impose a duty of care on Health Canada.

[41] CFIA brought Health Canada into the investigation for its scientific expertise in testing for salmonella and assessing the risk of contamination. Health Canada took on this role not because of any concern for River Valley's economic interests but because of its overriding public health mandate to prevent the spread of potentially contaminated food. And when it tested the samples from River Valley's pullet barns and did its risk assessment, Health Canada reported not to River Valley but to CFIA, the agency that had engaged its scientific expertise.

[42] I thus conclude that the motion judge erred in holding that Health Canada owed a duty of care to River Valley. The more difficult question, to which I now turn, is whether CFIA owed a duty of care to River Valley. [page12 ]

(c) Did CFIA owe River Valley a private duty of care?

[43] In finding that CFIA owed a duty of care to River Valley to conduct a prompt and competent investigation into whether DT104 had infected its flock, the motion judge did apply the Anns test. As will become apparent, I disagree with his application of that test, especially with his analysis of the requirement of proximity.

(i) Reasonable foreseeability

[44] The motion judge found (at para. 38 of his reasons) that CFIA knew River Valley's flock would start laying approximately 100,000 eggs daily by the end of November 2001. In his view, CFIA "should and could foresee that River Valley had to know as soon as possible whether or not that product would be condemned or saved". He therefore concluded that the requirement of foreseeability was made out: "CFIA inspectors and officers could readily foresee that River Valley was among those persons who could be harmed as a result of a negligently delayed investigation to find, or rule out, DT104 in these barns".

[45] The Attorney General challenges this conclusion. However, on the record before him, I think that the motion judge was justified in concluding that River Valley had established a reasonable foreseeability of harm to its economic interests. I would defer to his conclusion.

(ii) Proximity

[46] The motion judge also concluded that River Valley had established proximity. In his view, CFIA owed a duty of care not only to the public at large but also to individual farmers. Its duty to River Valley arose when it "targeted" or "singled out" River Valley for investigation.

[47] The motion judge's conclusion on proximity rested on four planks: the Supreme Court of Canada's decision in Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, [2007] S.C.J. No. 41, 285 D.L.R. (4th) 620; his finding that River Valley was "targeted" for investigation; his finding that River Valley had no choice but to rely on CFIA's investigation and to assist CFIA in carrying out the testing; and the investigative powers and obligations imposed on governmental authorities in several federal statutes.

[48] In this court, River Valley relied on the reasoning of the motion judge. It also relied on the recent judgment of the New Brunswick Court of Appeal in Adams v. Borrel, 2008 NBCA 62, [2008] N.B.J. No. 327, 336 N.B.R. (2d) 223 (C.A.), where that court held that the [page13 ]Attorney General of Canada owed a private duty of care to potato farmers in New Brunswick to conduct a timely investigation into whether a deadly virus was infecting their crops.

[49] In my opinion, Hill lends no support to River Valley's position. In Hill, the majority of the court recognized the tort of negligent investigation and held that a police officer owes a duty of care to a suspect that the officer is investigating. River Valley contends that, similarly, CFIA owed it a duty of care when CFIA investigated the possibility of DT104 contamination of River Valley's flock. However, I see no similarity between Hill and this case for two reasons.

[50] First, the holding in Hill is narrow. The Supreme Court found that a relationship of proximity arose in the context of a criminal investigation where the accused's liberty interests and Canadian Charter of Rights and Freedoms rights are at stake. At para. 27 of her majority judgment, Chief Justice McLachlin adverted to the narrowness of her holding:

Before moving on to the analysis of proximity in depth, it is worth pausing to state explicitly that this judgment is concerned only with a very particular relationship -- the relationship between a police officer and a particularized suspect that he is investigating. There are particular considerations relevant to proximity and policy applicable to this relationship, including: the reasonable expectations of a party being investigated by the police, the seriousness of the interests at stake for the suspect, the legal duties owed by police to suspects under their governing statutes and the Charter and the importance of balancing the need for police to be able to investigate effectively with the protection of the fundamental rights of a suspect or accused person.

[51] By contrast, River Valley's proximity claim was made in a non-criminal investigation where only its economic interests were at stake. Any liberty interests it might have had were not threatened and it asserted no Charter rights.

[52] Second, in Hill the police were investigating harm that had already occurred. Thus, the officer's investigation focused on assigning criminal responsibility to a particular suspect. Here, CFIA sought to prevent future harm. It was reacting to a potential threat, the severity and extent of which was unknown. Its investigation focused more broadly on preventing harm to Ontario consumers from the spread of contaminated eggs.

[53] Recently, in Correia v. Canac Kitchens, a division of Kohler Ltd. (2008), 91 O.R. (3d) 353, [2008] O.J. No. 2497, 2008 ONCA 506, this court extended the potential reach of Hill to the relationship between a private security firm retained by an employer to investigate theft and drug dealing by its employees and the specific employee being investigated. In my view, Correia also does not support River Valley's claim. [page14 ]

[54] In Correia, the employer, Canac, relying on the security firm's investigation, accused the plaintiff of theft and fired him for cause. However, the plaintiff was innocent; Canac had accused the wrong man. This court overturned the motion judge's summary dismissal of the negligent investigation claim against the private security firm. Rosenberg and Feldman JJ.A. concluded that whether the private security firm owed the plaintiff a private duty of care raised a triable issue.

[55] My colleagues justifiably saw similarity between the suspect's high interest in the police investigation of him and the employee's interest in the private security firm's investigation. In each case, the individual's reputation, dignity and [at para. 29] "how he may spend a good portion of his life" were at stake. And my colleagues noted that the private security firm, like the police, was investigating criminal wrongdoing. They concluded, at para. 47, "[w]here, as here, the private firm performs a function analogous to the public police, they ought to be subject to similar liability".

[56] The relationship between employee and private security firm in Correia, like the relationship between suspect and police in Hill, is far different from the relationship between River Valley and CFIA. None of the considerations that raised a triable issue on proximity in Correia exist in this case.

[57] The motion judge also found that proximity could be established because River Valley had been "targeted" for investigation. "Targeting" distinguishes this case from other cases where public authorities charged with responsibility for protecting the health of the public have been held not to owe a private duty of care to affected individuals. One example of these other cases is Eliopoulos (Litigation Trustee of) v. Ontario (Minister of Health and Long-Term Care) (2006), 2006 CanLII 37121 (ON CA), 82 O.R. (3d) 321, [2006] O.J. No. 4400 (C.A.). There, the family of a man who contracted West Nile Virus from an infected mosquito and later died sued the Ontario government in negligence for failing to prevent the outbreak of the virus. In dismissing the claim on a pleadings motion, Sharpe J.A. held that Ontario's statutory duties under the Health Protection and Promotion Act, R.S.O. 1990, c. H.7 did not establish proximity. The government's discretionary powers under the statute were to be exercised in the general public interest. They did not create a private law duty.

[58] In Eliopoulos no individual was targeted for investigation. Similarly, this court recently held that the federal government's regulation of breast implants and temporolmandibular joints (TMJ implants) did not give rise to a private duty of care to individuals harmed by these implants: see [page15 ]Attis v. Canada (Minister of Health) (2008), 93 O.R. (3d) 35, [2008] O.J. No. 3766, 2008 ONCA 660 and Drady v. Canada (Minister of Health), [2008] O.J. No. 3772, 2008 ONCA 659. In these cases too, the regulating authority did not target a specific person.

[59] I accept that when a government agency targets an enterprise for investigation that might suggest some relationship between the two. But proximity under the Anns test requires something more: it requires a sufficiently close and direct relationship, making the imposition of a private duty of care fair and just. Mere targeting in the context of a statutory regime under which a government agency is responsible for preventing and controlling the spread of disease in the interest of animal and public health is not enough to establish proximity.

[60] The motion judge further supported his finding of proximity by his holding that River Valley was compelled to rely on CFIA's investigation. Reliance is a factor that may assist in establishing proximity. But it is just one factor, and here, as I will discuss, it is overborne by factors pointing against a relationship of proximity. Moreover, the record shows that River Valley's reliance on CFIA's investigation was limited. It did assist in and rely on the results of CFIA's testing. However, River Valley ignored CFIA's recommendation that the eggs be diverted to pasteurization. Instead it relied on the egg industry's recommendation (made through the Ontario Board) that its flock be destroyed.

[61] Finally, the motion judge held that the governmental powers and obligations under s. 27 of the Canada Agricultural Products Act, R.S.C. 1985, c. 20 (4th Supp.); s. 23 of the Food and Drugs Act; and s. 45 of the Health of Animals Act "demonstrate a legislative intent to impose upon the defendants an obligation, or duty of care, not only to the public at large but also to individual farmers". Although the motion judge was correct in looking at the legislation to determine whether it reflected a parliamentary intent to give farmers a private remedy, the three provisions he relied on largely did not come into play in this case.

[62] Section 23 of the Canada Agricultural Products Act authorizes an inspector to "seize and detain any agricultural product or other thing". Section 27 regulates how long a thing seized may be detained. However, neither River Valley's flock nor its eggs were seized or detained.

[63] Section 23(1) of the Food and Drugs Act authorizes an inspector to enter any place where an article is stored. Subsection (a) permits the inspector to examine the article and to take samples; and subsection (d) permits the inspector to seize and detain the article "for such time as may be necessary". Although [page16 ]a CFIA inspector did take environmental samples from River Valley's flock, the inspector did not seize or detain any of the flock.

[64] Section 45 of the Health of Animals Act also deals with the seizure and detention of "an animal or thing", which, again, did not occur in this case. Indeed, as I view the record in this case, CFIA's inspectors acted under s. 38(1)(d) and (e) of the Health of Animals Act, which provides:

38(1) For the purpose of detecting diseases or toxic substances or ensuring compliance with this Act and the regulations, an inspector or officer may . . . . . (d) examine any animal or thing in respect of which this Act or the regulations apply and take samples of it; (e) require any person to produce for inspection or copying, in whole or in part, any record or document that the inspector or officer believes on reasonable grounds contains any information relevant to the administration of this Act or the regulations

[65] CFIA took environmental samples from River Valley's flock and tested them. It neither seized nor detained the flock. The motion judge misapprehended the record by relying on the seizure and detention provisions of the Health of Animals Act and the other two federal statutes to establish proximity. Moreover, as I will discuss, even if there had been a seizure or detention, I am not convinced that either would give rise to a private duty of care.

[66] Where, as in this case, a governmental authority exercises discretionary power under a statutory regime, proximity must be determined by looking at the relevant statute. The relevant statute in this case is the Health of Animals Act. It is the only source of CFIA's duties: see Cooper v. Hobart, at para. 43. The ultimate question is whether this statute discloses a legislative intention to exclude or confer a private law duty of care. In my view, the Health of Animals Act discloses an intention to exclude a private law duty.

[67] Although the motion judge considered the Health of Animals Act, he erred by not properly taking into account its purpose, its statutory compensation scheme and its immunity clause. These three compelling factors show the absence of proximity between CFIA and River Valley, and instead show that CFIA's duty is to the public as a whole, not to individual farmers or egg producers.

[68] The purpose of the statute can be gleaned from its long title, an act "respecting diseases and toxic substances that may affect animals or that may be transmitted by animals to persons, and respecting the protection of animals". In [page17 ]Vona v. Canada (Minister of Agriculture) (1996), 1996 CanLII 800 (ON CA), 30 O.R. (3d) 687, [1996] O.J. No. 3621 (C.A.), at p. 691 O.R., this court noted that the purpose of the Health of Animals Act is to enable the Crown to protect the health of people and animals. Nothing in this statute suggests that one of its purposes is to protect the economic interests of individual farmers.

[69] Inspectors charged with tracking the spread of infectious disease inevitably must focus their investigations on persons or sites where exposure or contamination has potentially occurred. In carrying out their investigations, inspectors appointed by CFIA have broad discretionary powers to inspect enterprises, even seize and detain and quarantine animals. In exercising these broad powers, inspectors are not obliged to be mindful of the economic interests of individual farmers. Their overriding concern is the protection and promotion of human and animal health.

[70] The statutory compensation scheme in s. 51 of the Health of Animals Act also points to the absence of proximity. Section 51(1)(a) authorizes the Minister of Agricultural to order compensation out of the Consolidated Revenue Fund to an owner of an animal that an inspector has ordered to be destroyed: [See Note 1 below]

51(1) The Minister may order compensation to be paid from the Consolidated Revenue Fund to the owner of an animal that is (a) destroyed under this Act or is required by an inspector or officer to be destroyed under this Act and dies after the requirement is imposed but before being destroyed; (b) injured in the course of being tested, treated or identified under this Act by an inspector or officer and dies, or is required to be destroyed, as a result of the injury; or (c) reserved for experimentation under paragraph 13(2) (a).

[71] Section 51(2) fixes the amount of compensation payable:

51(2) Subject to subsections (3) and (4), the amount of compensation shall be (a) the market value, as determined by the Minister, that the animal would have had at the time of its evaluation by the Minister if it had not been required to be destroyed

minus (b) the value of its carcass, as determined by the Minister. [page18 ]

[72] Once compensation has been paid under s. 51, then s. 9 of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50 applies. That provision bars an action against the Crown in respect of any claim for which statutory compensation has been paid:

9. No proceedings lie against the Crown or a servant of the Crown in respect of a claim if a pension or compensation has been paid or is payable out of the Consolidated Revenue Fund or out of any funds administered by an agency of the Crown in respect of the death, injury, damage or loss in respect of which the claim is made.

[73] By enacting a statutory compensation scheme in s. 51, Parliament addressed the concern that the economic interests of individual farmers may be harmed by CFIA's actions. A farmer whose animal is destroyed under a CFIA order or is injured during CFIA testing is entitled to apply for compensation. At the same time, the combination of s. 51 of the Health of Animals Act and s. 9 of the Crown Liability and Proceedings Act demonstrate an express legislative intent to preclude an action for negligence against CFIA where statutory compensation has been paid.

[74] Moreover, a farmer cannot bypass the underlying intent of the scheme in s. 51 by refusing to apply for compensation from the Consolidated Revenue Fund. In other words, a farmer whose animal is ordered destroyed or is injured during testing cannot refuse to apply for statutory compensation and by doing so maintain CFIA owes a private duty, the breach of which entitles the farmer to damages in the Superior Court. The farmer must seek compensation under the Act.

[75] Thus, River Valley's claim comes down to this proposition: when CFIA takes the drastic action of ordering the destruction of an animal, it owes no private duty of care; yet, when CFIA takes less drastic action, as it did in this case, it then owes a private duty to an individual farmer. That proposition, respectfully, is illogical.

[76] River Valley was not without options: it could have tried to pursue CFIA's recommendation to divert its eggs to pasteurization and thus minimize its losses; it could have tried to claim statutory compensation on the footing that CFIA's actions amounted to a "constructive" destruction order; or it could do what it eventually did -- obtain compensation from the industry fund, which is a residual safeguard for farmers, and from its own insurers. The one option River Valley did not have was a negligence action against CFIA.

[77] The statutory immunity clause in s. 50 of the Health of Animals Act further shows an absence of proximity. Section 50 shields CFIA inspectors from lawsuits for actions taken in carrying out their statutory duties: [page19 ]

50. Where a person must, by or under this Act or the regulations, do anything, including provide and maintain any area, office, laboratory or other facility under section 31, or permit an inspector or officer to do anything, Her Majesty is not liable (a) for any costs, loss or damage resulting from the compliance; or (b) to pay any fee, rent or other charge for what is done, provided, maintained or permitted.

[78] Section 50 is a broad immunity clause. Unlike many other statutory immunity clauses, it is not even qualified by an express requirement that to be entitled to its protection, inspectors must be acting in good faith. River Valley seeks to get out from under s. 50 by contending that it applies only when CFIA's inspectors carry out their duties properly and does not apply when they act negligently. That contention makes no sense.

[79] By this wording, s. 50 protects inspectors whether or not they are at fault. Moreover, it is precisely when they are alleged to be negligent that they will likely need to rely on this protection. In Vona, this court held that s. 50, standing alone, completely barred any action for negligence. Here, it is unnecessary to decide whether some actions of CFIA inspectors may not be covered by s. 50. At the very least, s. 50 strongly points to a legislative intent to preclude a private law duty.

[80] Last, I will deal briefly with the New Brunswick Court of Appeal's decision in Adams -- relied on by River Valley -- which seems at odds with my conclusion on proximity. In that case, as I said earlier, the court held, at para. 2, that the Attorney General of Canada owed provincial potato farmers a "prima facie duty of care to conduct a timely investigation with respect to identifying the source of [a potato] virus and that that duty was not negated . . . by overriding policy considerations . . .".

[81] However, there is one important difference between the statute in issue in the New Brunswick case, the federal Plant Protection Act, S.C. 1990, c. 22, and the statute in issue in the case before us, the Health of Animals Act. The difference lies in the purpose of each statute. Under s. 2 of the Plant Protection Act, the federal government's statutory obligation is ". . . to protect plant life and the agricultural . . . [sector] of the Canadian economy by preventing the . . . spread of pests". From this provision, Robertson J.A. found, at para. 44, that "an immediate purpose of the legislative scheme is to protect the agricultural sector of the economy by protecting the interests of farmers". In the light of this finding, Robertson J.A. concluded that "it would be disingenuous to hold that no prima facie duty of care was owed to this group of entrepreneurs". The Health of Animals Act shows no legislative purpose to protect the interests of individual farmers. [page20 ]The different legislative purposes of the two statutes alone distinguish the claim in Adams from River Valley's claim.

[82] I am obliged to add, however, that s. 38 of the Plant Protection Act is a statutory immunity clause similar to s. 50 of the Health of Animals Act and that s. 39 of the Plant Protection Act provides for statutory compensation similar to the compensation provided for in s. 51 of the Health of Animals Act. In Robertson J.A.'s view, ss. 38 and 39 were provisions for the trial judge to consider in assessing damages. In my view, ss. 50 and 51 are very relevant to the determination of proximity. To that extent, our analyses differ.

[83] I conclude that the legislative purpose of the Health of Animals Act, together with the provisions for statutory compensation in s. 51 and statutory immunity in s. 50, in combination, show an absence of proximity. Thus, CFIA did not owe a prima facie duty of care to River Valley.

(iii) Overriding policy considerations

[84] Although unnecessary to my conclusion that no private duty of care exists, I see at least one overriding policy consideration that also negates a private duty. That consideration is the potential for conflict if CFIA must be mindful not only of the health of animals and the public, but as well the economic interests of individual farmers.

[85] River Valley submits that no conflict can exist because the public, CFIA and individual farmers all have the same interest: to ascertain the absence or presence of disease or contamination, in this case DT104. As testing is scientific and objective, all interested and affected parties will consider themselves bound by the results.

[86] I take a different view. In some instances, and this case is perhaps a good example, the potential for conflict between the economic interests of an individual farmer and the public interest does exist. The conflict may arise over the extent of the testing necessary to determine whether an animal is diseased. In this case, initial testing of River Valley's barn 4 showed no DT104 in any of the samples. With those negative test results in hand and having regard to its own economic interests, River Valley may well have fairly claimed that it should have been able to market its eggs. However, CFIA, with the benefit of Health Canada's expertise, took a more cautious approach in the public interest and insisted on further testing at the point where the hens were about to lay their eggs. CFIA fairly claimed that this further testing was needed to be fully satisfied that the [page21 ]flock in barn 4 was not contaminated. Undoubtedly, other kinds of conflict may arise if CFIA inspectors have to worry about the economic interests of individual farmers as well as their obligation to the public to protect human and animal health.

[87] I would answer no to the question did CFIA owed a duty of care to River Valley?

Third issue: Does the statutory immunity in [s. 50](https://www.canlii.org/en/ca/laws/stat/sc-1990-c-21/latest/sc-1990-c-21.html) of the [Health of Animals Act](https://www.canlii.org/en/ca/laws/stat/sc-1990-c-21/latest/sc-1990-c-21.html) bar any claim against CFIA?

[88] This question was not directly before the motion judge. And it is unnecessary to answer it because of my conclusion on the other two issues.

D. Conclusion

[89] I would allow the appeal and set aside the order of the motion judge. I would hold that neither Health Canada nor CFIA owed a duty of care to River Valley.

[90] If the parties are unable to agree on costs in respect to the motion and the appeal, they may make written submissions to the panel within 20 days of the release of these reasons.

Appeal allowed.

Notes

Note 1: I make no finding, however, on whether CFIA's actions amounted to a "destruction order" -- in substance, a "constructive destruction order" -- for the purpose of obtaining compensation under s. 51 of the Health of Animals Act.